tv Squawk on the Street CNBC February 11, 2013 9:00am-12:00pm EST
thing, he resigned, so he could have a reasonable succession plan. this is the oldest major institution in the world. secondly, it opens up the possibility that one day priests can marry, which i would be the salvation of the church. this is going to be a very interesting debate as a result of this. >> i was born catholic. i'm not now. >> you're supposed to say thank you for being here today. >> occasionally we see commentary on capitalism in action. i'm not a participant per se, i'm just a spectator, and it's a fun sport. >> thank you. and thank you, michelle. join us tomorrow. "squawk on the street" is next right now. congratulations to grammy winner fun and all the grammy winners from last night. welcome to "squawk on the street." i'm carl equipment a nil la with melissa lee, david faber here at
the nyse. david cramer is off this week. a busy week it's going to be. europe this week, finance minister meeting from all of the eurozone talking about cypress and greece. as for asian markets, mostly closed as the chinese new year took place over the weekend. it is the year of the snake. our road map begins with a hat trick of news out of technology. dell shareholders balking at the buyout price. and apple testing a watch-like device. >> the s&p 500 is up for the first six weeks of the year. something that has not happened since 1971. a big week is ahead as carl mentioned with earnings from coke, cisco, gm, whole foods and michael kors. >> nemo, watch the impact on business, ford at least said it should not have a major impact on february sales. >> the world is reacting to pope benedict's announcement that he will step down at the end of the month citing his advanced age. he's the first pope to resign in
almost six centuries. dell defends the buyout in an s.e.c. filing. they said the deal spearheaded by michael dell and private equity firm silver lake partners offers the best value for shareholders. three more of dell's largest investors are joining southeastern asset management. they believe the deal undervalues the company. david, we had this discussion on day one. it's been a while since it's seen $20. but it seems that's what they want. >> the buy outprice could make you to hope in some way you can at least get back to even. >> always bit a risk when you do a deal. even as it may be for a company that is facing challenging times, that is below the 52-week high. we knew it would likely be at that level. my reporting, and experience on these matters, would indicate really best to see and wait.
let's see what happens over the next four, five, even six months before this deal closes. if the s&p were to rise significantly, it might perhaps make those who are against the deal braver, because they would feel the down side would be less than if they were to reject the deal. in terms of the recommendations that they give the institutions who follow them, nonetheless i would still argue at this point it is unlikely that you'll see this deal stopped by the shareholders. it is a majority. they need a majority of the unaffiliated shares. so michael dell is not part of this vote, and his 16%. given that, you still have two earnings reports between now and the close of this deal, to show how good or not good things are at dell. you still need -- they still need to issue their debt, for example, to get their financing costs known specifically by the buyout group. they were arguing about, do we pay or not pay the dividend between silver lake. we'll see. and then finally, remember
cablevision. just something i would say, leverage buyout back in 2007. it was $36 a share. let's call it around $21 now, because they have spun off msg and amc since then. if you take a look at cablevision shares, they are not anywhere near $21. >> right. the numbers don't necessarily add up either. even though southeastern is a majority of the independent shareholders, 8.5% stake, i believe, you know, they estimate 20% of the shares currently are in the hands of merger arbitrators. >> probably even more than that has changed hands. >> southeastern might not have the numbers. >> it probably doesn't have the numbers. even if iss were to vote no, you have to somehow think, at this point they may have a call option on their hands. maybe you could get a bump, if it looks like this vote may go against. this is something we'll be revisiting months down the road. we'll see how southeastern does.
the people putting this deal together were aware of southeastern. we've already heard about the proxy in the merger agreement of all the things they looked at. the ways they thought they could create value. it will be perhaps an effective argument for those saying you're selling too cheap. >> you would agree that the go shop this time around is a little more than a formality? >> it is a go shop that does have provisions in it, carl, that is a little bit better than what we've seen. >> yeah. >> and unexpected that still you're going to get any real interest. again, it comes back to, if you can't include michael dell in your buyout group, certainly you won't see another buyout firm step in. strategics, my reporting indicates they already went down that road to some extent at least and sniffed out some time back, is there strategic interest. we'll see. they have that as well, the 45-day period to say, hey, we looked at other buyers and higher prices. >> you have to believe some other form of deal will happen,
will transpire in order to get to $20 a share. if michael dell is not going to be part of this, it's off the table. >> unless their argument is somehow in the fundamentals, they can sell things, lever up the balance sheet. there are others who say why not keep it a public tech company and lever it up. those behind this deal will say, why take the broad risk amongst all shareholders, when we can just do it with two people, let's call it michael dell to take that risk. rarely do these oppositions actually go through to resulting in a deal being voted down. but it is something, at least, worthy of keeping an eye on. >> yes, definitely. we're also watching shares of google. eric schmidt is selling about 42% of his stake in the company. that's about 3.2 million shares. s.e.c. filing showed schmidt plans to sell the stock over a one-year period. pretty good timing on schmidt's part, considering google shares
hit 52-week high at the very least on friday. >> couple big upgrades last week, of course. i think, i forget what the last one was, but i saw a price target in the 930s or so. we'll see. of course, it's part of a plan of 3.2 million shares over the course of the year. it won't happen today or tomorrow. >> he's been selling a lot of stock. i did reach out to a couple of shareholders that i know, and neither one of them seem overly concerned in any way. one saying it was a nonevent. we'll see what the reaction is today. it shows how incredibly wealthy this man has become. you know, last year he had 9.1 million shares. he sold 1.5 million shares over the last year. having similarly filed to say he would be selling. so he went down from 9.1 million to 7.6 million, and now going to 4.4 million. he certainly is reducing his stake in a significant way.
listen, he's in his late 50s. he's executive chairman now. >> a smart thing to do. >> i think a financial planner would say, don't have all your billions in one place. meanwhile, the stock keeps going up. just average up. >> yeah, keep averaging up, exactly. >> we start this week, of course, this new market week with the s&p 500 coming off a six-week winning streak, highest close since november of 2007. you also have the nasdaq at 12-year highs. the dow a little more than seven points below 14,000. what is next for the markets here. let's bring in michael jones with river front investment group. michael, great to see you. >> good morning. >> of course, we are entering into sort of a new political period for the markets in that we have the state of the union address tomorrow, and then we're bumping up against the sequester deadlines. what do you anticipate for the markets as we are at these new highs, but entering potentially a rough ride politically speaking?
>> we're obviously overdue for some sort of pullback. most crowd sentiment creators are indicating we're at an optimistic extreme. we should keep in mind that the fed is pushing $85 billion of new liquidity into the market every month, and despite state of the union and some of the other bumps we've got coming, political uncertainty and policy uncertainty is much lower than it was six weeks ago. you've got the fiscal cliff issue resolved, and probably more importantly, president obama seems to have pulled the republicans' fangs with respect to the debt ceiling. that's probably the big risk that the market was worried about. >> you made recent changes to your 2013 allocation strategy. some of them are interesting. high volatility u.s. large caps and micro cap stocks. it would seem you're increasing the beta place. when you say u.s. large cap volatile stocks, what do you mean by that? >> well, we believe that there's an evolution in the asset
classes that investors are going to be tapping into in the next decade. you know, if you look back over the last 20 years, people spent a lot of time arguing, what was the value stock, what was a growth stock. and a lot of times it was in the eye of the beholder. volatility is a much more objective mesh yasure of what a stock is. you can do very good long term, 80 and 90-year analysis of what this asset class means. and right now, we show high volatility stocks have been beaten down very, very much in the rally, relative to low volatility, sort of bond proxy stocks. that suggests to us that they're one of the best opportunities in the market, as we stabilize, as the fed keeps pushing in liquidity. i think you're going to see a return to those kinds of beaten-down names. >> you know, michael, one of the big talkers of the morning is this discussion as to whether or not this 13-year period, where equities have essentially done
nothing, is coming to an end. big piece in the journal today. i just wonder if you think we're getting a little too anxious to have that discussion, if it's too early for that yet. >> no, not at all. and here's why. we are some that believe that there was no lost decade per se. the last 13 years, stocks have been sideways because they were insanely overvalued in '99 and 2000. they were about 100% overvalued. that has happened about four times in the past. every time that has happened, you've spent about 12 to 14 years going sideways, while you work off the excess overvaluation. we're getting towards the end of that period. as a matter of fact, right now, our price matters works suggests that the market is still about 15% to 20% undervalued. so i say we still have room to run just to get back to fair value. >> michael, good to speak with you. thank you for your time. the northeast still trying to dig out from winter storm nemo, which dumped at least
three feet of snow on some parts of new england. travel bans are still in effect for parts of massachusetts. the weather channel's mike seidel is in plum island, massachusetts, one of the hardest hit areas. mike, good morning. >> good morning, carl. out here they not only had two feet of snow, but they had to deal with the ocean, raging atlantic with 20 to 25-foot waves taking out even more beach. this is a small cut compared to what you'll see down the beach. this is six to seven feet. down the beach, you've got about a 20-foot cliff. they put these berms in after the december 28th storm, but it was no match for nemo. around the area still, 120 customers without power in massachusetts, add on about another 20 in the state of rhode island. that's where all the power is out in these two states. mostly down close to the coast. most of the power in boston is on. where they had the fifth biggest storm on record. we've got a little bit of light snow this morning. it will not last very long. it will go to sleet, freezing
rain, and then everybody will turn to rain. we have delays inbound to laguardia and philadelphia. a nuisance today. people trying to get things back to normal. up here it's hard to see around the corners of the streets, because the snow is piled so high. all night long, this is what i heard, boop, boop, boop, snow plows, and bulldozers taking the snow out of the downtown area. that's all i heard all night long. that's why i feel so good this morning. back to you. >> mike, everybody knew what you were talking about on that first beep. that was great tv. thanks so much, mike seidel joining us from plum island. >> a surprise announcement from the vatican. pope benedict xvi said he will step down on february 28th citing health reasons. he becomes the first pontiff to abdicate in 600 years. cardinal timothy nolan re acted
to the pope's announcement this morning on nbc's "today" show. >> i'm as startled as the rest of you and anxious to find out exactly what's going on. >> i find myself kind of somber, you know? in a way, boy, i love this pope. i mean, every catholic feels the pope is his father, we call him our holy father. the world looks to him with respect and affection. >> the vatican spokesman said a new pope will be elected by the ed of march. some of my favorite jokes on twitter had to do with him making some money in the private sector. he's raised the bar as to what you're going to give up for lent. there's good reaction today, happened early this morning. media and twitter was on it. >> we continue tweeting with the question. >> it's a good question. >> he's got about as many followers as joan rivers, i think. there's been rankings that he falls in the joan rivers category. >> after the ipod, the ipad and
watches and that would operate on the ios platform. this whole wearable technology segment is sort of all the rage. some watches are already on the market. >> there's pebble. microsoft unveiled the concept at ces. but i don't wear a watch much anymore because the time is on my phone. >> i do wear a watch. i recently got -- somebody sent me the nike fuel band. but i found that -- you have to plug in, and go online. >> that's too much. >> but it's similar in the sense of trying to track your movements and do different things for you, and then we've got the google glasses. >> tim cook's going to speak at the goldman conference tomorrow, after the bell. 4:15, i think is when he starts speaking. it comes a couple days after the herd mentality of the analysts. some continue to get it wrong.
and why the guy whose record is best on it is a private analyst whose target is, i think, 320, something like that. >> yeah. brian marshall had an interesting note out on sunday who said he's been on the road for six weeks straight. and right now, a lot of shareholders are developing bases in apple. they're actually going in and buying stocks. it will be interesting to see how this pans out, given the push of return of capital to shareholders, the meeting tomorrow and the shareholder meeting later this month. >> we'll speak to tim stewart at the top of the next hour. he can take the oldest story in the world and make it fresh. >> yes. >> so we look forward to talking to jim in a few moments. what's the most thing you should focus on as we begin a new trading week? art cash has words of wisdom. take one more look at futures. a busy week is coming up. "squawk on the street" live from the nyse, straight ahead. [ male announcer ] i've seen incredible things.
otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪
we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location.
the large players are buying some insurance in a couple of places. not only -- i had written about kind of a false spread on the vix that it might soar above 20 in the next 50 days or so. and we've seen large put buying of a few of the indices, and etfs. we've got by some counts 57% bullishness. that gets a little scary on the contrary basis. and of course, it is the year of the snake. and the year of the snake is the least bullish of all the 12 asian zodiac characters. and it's seen some spotty events. 9/11 happened in the year of the snake. the attack on pearl harbor was in the year of the snake. and something called the crash of '29 happened during the year
of the snake. >> wow. all this snake stuff. >> we've got the super bowl on our side. >> arthur, i want to know when you see new secular bull market stories, as the "wall street journal" does today, your reaction? >> well, i'm a little cautious. i've been around for a long time. i've watched the 17.6-year cycle go. and we're approaching for the third time highs in the s&p, and in the dow. i want to see us get through those. in the 17.6-year cycle, you go through a phase where the market moves up and down. but it never gets a one-way ride to the upside. and the other part, like the biblical fat and lean years. and on the other side you could throw a dart in the wall and almost anything you buy goes up. >> retail investors have been plowing into the markets, particularly in the month of january. the article in the journal points out the last time this happened, it happened just
before '99. but they didn't pull out to the extent that they pulled out this time. so that may be the difference. >> well, i think it is. of course, everybody talks about the great rotation out of bonds into stocks. i don't really see a great deal of evidence of that. we've had a bigger than historic surge of new investments in equities, but they're still plowing money into bonds. so we'll wait and see if it turns into a real stampede. historically, we've seen the early part of the year, see some of these inflows. >> finally a quick thought for pope benedict. i know your thoughts are with him today, yeah? >> yeah, it was a surprise. and let us hope that it is fatigue and he can rest in a prayerful retirement. there's some concern that it might be some kind of debilitating disease, heaven forbid alzheimer's or whatever. he would recognize it. you cannot serve in that post if your mental acuity is at all
[ male announcer ] at his current pace, bob will retire when he's 153, which would be fine if bob were a vampire. but he's not. ♪ he's an architect with two kids and a mortgage. luckily, he found someone who gave him a fresh perspective on his portfolio. and with some planning and effort, hopefully bob can retire at a more appropriate age. it's not rocket science. it's just common sense.
from td ameritrade. you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell set to ring in a little less than 90 seconds. we're beginning the seventh week of the year. the s&p has been up for the first six. hasn't done that since 1971. i don't know about you guys, i was not potty trained yet. going back a long time. dow did have its first losing week. but by 16 points. hearing what cashin said about 500 days without a 10% correction, s&p, we're at lofty levels. >> we are. an interesting point art raises is while we've seen flows into equity funds, we haven't necessarily seen them out of bond funds as much as you might expect. the bulls would argue there is more to come, if we see a more vigorous rotation.
>> right. and the bears would argue, well, all of this that we've seen was seasonal. it was simply seasonal. money put back to work. >> yeah. >> exactly. so we'll see. in terms of today's session, obviously technology is going to be one to watch. especially as we had a lot of large cap technology stocks do well last week, a lot hitting record highs. eric schmidt is selling over the course of this year, a stake of his shares in google. we'll watch google shares and how they get that. apple shares high opening higher. [ bell ringing ] >> there's the opening bell on monday morning. the s&p 500 at the top of your screen at the big board. nyse executives ring in the bell from the sixth annual conference in hollywood, florida. bob pisani is there, and we'll hear from him a little bit later. we started the program
discussing dell. one bit of m & a. we're hoping for some news regarding airlines in the next few days. this week, regarding amr or not? >> i think there have been a lot of reports to that effect. my sense is, it may be as soon as that as well. you have all the signs lining up. including potential agreement in terms of dove parker, ceo, tom port staying on for at least a year. current ceo of american. very close to an agreement on ownership structure in terms of somewhere around 72% of the combined company being opened by amr creditors, and equity recovery value. we sometimes forget about that as we take a look at u.s. airways and what this would mean to the competitors. the power in latin america, as you pointed out. but there may actually be recovery value for the equity of american airlines. which is rare, and probably somewhat unexpected, certainly when this company filed for bankruptcy some time back, having avoided that fate like so many others, but finally needing
to reorganize, to try to get its unions to agree to certain pay cuts and things of that nature that would put its pay scale in line with the rest of the industry. they feel they've done that, largely taken many steps to do that and can realize a lot of synergies if this merger happens. >> interesting to see the u.s. air brand, go the way of an eastern and branniff and piedmont. >> they've got the new -- they're going with that, no doubt. the american and the new logo. >> all right. let's take a check on shares of czr. last week there was much excitement around governor christie of new jersey supporting online gambling in the state. caesar's is the one that benefited greatly since giving back a lot of the gains. down by more than 6%. also worth noting on the back of earnings last week, we have a lot of analysts upgrades and
downgrades this week in reaction. aol for one. big gains off last week, off the better than expected earnings. aol shares up 4.5% today. the price goes up to $45 a share from $40 a share. outperformed ratings, new rating on the stock. and the analysts there like the fourth quarter results, of course. including revenue growth and growing subscriber base over at aol. another one of these gaining off the strong earnings last week. >> they said one of the greatest turn-around in history. a little ahead of himself. >> at least he limited it to business. it was quite impressive. >> mcgraw-hill and as well as moody's both up today. worth noting, given the performance that both stocks suffered last week after the government chose to sue. there's a look at moody's.
perhaps they benefited from not having a paper trail, or email trail, taking steps to curb emails at the company, starting as far back as 2005. perhaps one reason why the evidence is not there enough, at least to have the u.s. government also charge moody's. abo but that continues to be a real question. moody's stock price got hit. >> blumenthal said if there's any equity, there will be other defendants named. obviously moody's ostensibly will be one of those. mcgraw-hill has earnings tomorrow, so maybe clarity on that situation as well. carnival? the cruise ship story out over the weekend. triumph lost power on the coast of the yucatan. lost propulsion power. they still had generator power and food and water, but had to be towed in. passengers going to get a full
credit, i think. and a credit for a future cruise. one more bad thing for the industry. we'll see what it does. the pricing, the concordia did not have a lasting effect on pricing. >> not at all. that was amazing. this is a minor blip, it could be towed in so it wasn't stranded out at sea. it's limited in terms of the damages here. potential damages that it could have faced. wendy's is up by almost 4%. new menu items and turn-around. this gets at the whole restaurant sector where we saw mcdonald's last week, analysts convinced mcdonald's is losing market share to its competitors. mcdonald's, worth watching as well today, too. it is getting an upgrade, actually the price target rate, excuse me, over at susquehanna, saying the near term results are choppy. they believe same-store sales will accelerate to 2013 even though we're seeing difficult
comps here. >> keep an eye on jcpenney. one of the stories not as substantive in the "new york post," to say the least. but definitely intriguing and probably almost catty. this report that ron johnson, ceo, works four days a week at best, according to some suppliers, that they put him up at the ritz-carlton where he says he's doing work. nobody, according to the post, really knows. but that this culture of coming in later, leaving earlier, working less is, i guess one more knock on the company, according to some who talked to the post. >> although if you read "the new york times" this weekend, as i know you did, you saw the studies recently that indicated a lot of vacation time, naps during the day, vigorous activity, not working that hard. i have focused my career on this. and i'm very glad to see it's being vindicated. and perhaps ron johnson has also found similar benefits. >> perhaps. all right.
let's check in with mary thompson, in for bob. >> hey there, melissa. we have a slightly weaker picture for the markets today. the dow right now, close to the lows of the day, off 30 points. the nasdaq holding up fairly well, only down two. within strikeing distance of a 12-year high. s&p down two points. traders are expecting a fairly quiet day today. friday was the quietest day of the year. they expect some of the after-effects of nemo, of course, the asian holidays that are taking place, to keep a lid on trading volume today. as it sets up, you mentioned earlier in the show that the weekly winning streak for the nasdaq and s&p is their best since 1971. both of these indices up for six straight weeks. contributing to this is the strong earnings we've seen. 70% of companies coming in ahead of expectations. traders say the trend still looks pretty good. a slight pause may be in order.
they don't see any kind of significant pullback at this time. this week, what they're watching, of course, is the retail sector. we have retail sales later in the week. a couple of key earnings reports from the likes of michael kors as well as fossil to get a sense of what the consumer here in the u.s. is doing. let's look at a couple of other stocks. we had david talking about this earlier. shares of u.s. air, the expectation the merger could be announced this week between american airlines. it continues to climb in today's session, up slightly. lowe's having after-effects of superstorm sandy. we want to touch on colgate palmolive. the company said in the first quarter it's going to have to take a 25 cents hit because the devaluation of the venezuelan currency. it receives about 5% of its sales from venezuela. after the first quarter will it take a hit of 5 cents to 7 cents
a share for the rest of the year because of the devaluation. we want to touch on gold. sharon epperson will have more on this later. it's trading lower. keeping pressure on the gold stocks today. they're all weaker across the board. the dow off about 38 points. carl, back to you. >> mary, thank you so much. let's head uptown to the nasdaq and check in with seema mody. >> good morning, carl. let's start with blackberry. we're seeing shares drop at the open. the company has reportedly lost a significant enterprise customer, home depot. we're seeing shares lower on the day. apple, though, posting a strong comeback last week, gaining better than 5%. traders according to the rotation of capital back into apple. a technical analyst at gray wolf said the next key resistance level for apple is 500. if it breaks that, it has a shot at 575 to 595. apple he said is outperforming amazon and seeing the first evidence of weakness in shares
of the online retailer. so that's a chart to watch. and an acquisition in the software, defining networking space, we're seeing shares moving fractionally this morning. in biotech, all eyes on celgene saying they have approval in china. emerging markets, you can see celgene up .4 of 1% on the day. let's head to the bond pits now. rick santelli is in chicago. good morning, rick. >> good morning, melissa lee. well, if we looked at the fixed income markets, interday chart of 10s, we could see highly unchanged at 195. if you open the chart up towards april of last year, you could see we're still hovering near 9 1/2-month high yield low price. but we've been hovering there for a while. remember, we have auctions this
week. 3s, 10s, 30s. we'll have 10s on the auction block on wednesday. if we look in the foreign exchange market, this is really key. you know, the pound is not having a great time against the greenback. so as you look at one-year chart of the pound versus the dollar, you'll see that the pound's roughly at a six-month low versus the greenback. but let's look at the pound versus the yen. it is still hovering very close to a three-year high. now, let's swap out and look at the dollar/yen, which is hovering very close to a two and three-quarter year high. so this shows us is that the uk has their fair share of issues, but it continues to improve against the yen. the yen, call it currency war, call it whatever you want, call it a memo from ben bernanke in 2003, but whatever you call it, the traders are calling it one of the better trades of 2013. carl, back to you.
>> rick, busy week for you, too. let's check out the latest moves in energy and metals, too. sharon epperson at the nymex. >> good morning, carl. gold has not been such a great trade. we're seeing gold prices at a five-week low right now. a lot of technical selling going on, prices below 1650 an ounce. the selling we're seeing the lowest in the average. the volume is then with the lunar new year in asia. and that holiday also creating a lot of lack of liquidity in the marketplace. we're looking as well at the g-7 and what they're going to say about currency devaluations. that is something that is worrisome to traders. overall we've seen the rotation out of gold and into equities. it seems as ubs points out, that a lot of traders don't want to be in this safe haven of gold, they want to be in riskier equities. that's the indication we've been seeing for the last several weeks. we're also watching what's happening in the energy space. a pullback after hitting the
yearly highs for brent crude and for refined fuels on friday. the pullback that we're seeing, though, in brent, really not that severe as traders are saying, technically it's still a bullish market. we're looking at bullish sentiment at the highest level since the long positions in the brent crude market. not much relief at the pump. prices at the pump about 30 cents higher than a month ago for unleaded gasoline. even though the futures are a little bit on the decline, not such good luck for drivers at the gas pump. >> sharon epperson, thank you. coming up, winter storm nemo blankets the northeast and knocks out power for tens of thousands of people. an update on the recovery from the storm and how one new england utility is faring and trying to turn the lights back on. take a look at this morning's early movers here on wall street.
(music throughout) why turbo? trust us. it's just better to be in front. the sonata turbo. from hyundai. all stations come over to mithis is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers.
tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan. tdd#: 1-800-345-2550 with the new global account from schwab, tdd#: 1-800-345-2550 i hunt down opportunities around the world tdd#: 1-800-345-2550 as if i'm right there. tdd#: 1-800-345-2550 and i'm in total control because i can trade tdd#: 1-800-345-2550 directly online in 12 markets in their local currencies. tdd#: 1-800-345-2550 i use their global research to get an edge. tdd#: 1-800-345-2550 their equity ratings show me how schwab tdd#: 1-800-345-2550 rates specific foreign stocks tdd#: 1-800-345-2550 based on things like fundamentals, momentum and risk. tdd#: 1-800-345-2550 and i also have access to independent tdd#: 1-800-345-2550 firms like ned davis research tdd#: 1-800-345-2550 and economist intelligence unit. tdd#: 1-800-345-2550 plus, i can talk to their global specialists 24/7. tdd#: 1-800-345-2550 and trade in my global account commission-free tdd#: 1-800-345-2550 through march 2013. tdd#: 1-800-345-2550 best part... no jet lag. tdd#: 1-800-345-2550 call 1-800-790-3801 tdd#: 1-800-345-2550 and a global specialist tdd#: 1-800-345-2550 will help you get started today.
because what you don'tu know can hurt you.rance. what if you didn't know that weeping willows have invasive roots? what if you didn't know that a trampoline... could affect your liability? and what if you didn't know that most cars... get broken into when the weather warms up? here, buddy. the more you know, the better you can plan for what's ahead. get smarter about your insurance. ♪ we are farmers bum - pa -dum, bum - bum - bum - bum ♪
as you may know by now, pope benedict announced he will abdicate his position at the end of the month. the first pontiff to do so in the last 600 years. claudia, good morning to you. talk about some of the reaction from your part of the world today. >> yes, carl. well, the reaction was immediate. the prime minister here in italy said he was shaken by the news, while the chancellor angela merkel said she respects his decision. and david cameron sending his wishes. it comes in a meeting this morning, he announced this decision to leave the papacy at the 28th of february at 8:00 at night. it was a decision made without consulting anyone. there was a lot of surprise. and also, the spokesman, when he made a speech -- or when he had
a press conference just a few hours later, he said, you know, we need some time, we need some days to try to better understand how to move forward. just to better understand what's going to happen afterwards, is that there will be a conclave of 118 cardinals that will be electing the new pope. so clearly what happens between now and then, really, is that the pope will continue doing what he has done so far. his decision was unexpected. and the way he announced it was very, very simple. he said he doesn't feel he has the strength, mental and physical and spiritual, to move forward in this position. he needs the physical strength that he does not have. he has been ill. his health has gotten worse in the last 18 months. clearly what is being said now that the decision, which is absolutely unique, in 700 years a pope has not stepped down from his position, it's perceived as something he has done that is
responsible, so to speak, because he feels the church needs a solid representative. that is very interesting what is happening here. >> claudia, do you anticipate us finding out more details in the coming weeks, or even after the pope steps down as to exactly why he's stepping down, if there is another reason, like the presence of a disease or some sort? >> in terms of his health, there was a statement made this morning by one person that was close to the vatican that said he has a degenerative bone disease that is making his health worse. but nothing specific in the sense that this could be just, i don't know, osteoporosis for all we know. he didn't mention the name of the disease, but he said something was worsening his health. but of course, you know, many of the media as well as just the world in general is looking on to this, looking to better understand. because as we know, many popes in the past have been unhealthy and stayed on in their position
because that is just how it is done. really the question does come up, as you're also asking. so it will be interesting to see what does come out in the next weeks. but what everyone is saying so far, he did it because he wants there to be a strong pope right now in such a difficult time. >> claudia, thank you so much for your time. let's head over to bertha coombs. she's tracking the aftermath of the powerful northeast storm. >> even as folks are actually sitting and cleaning up, they're bracing for more bad weather. it's making its way from the upper midwest and causing travel days today. nearly 250 flights canceled this morning. 20 flights out of reagan national in washington, d.c. alone. this weekend, though, saw nearly 6,000 flights canceled. amtrak, meantime, has resumed. high-speed service from new york to boston. but rail service north of new york, pretty much on a limited schedule still. connecticut now able to tap into federal funds to dig out from
upwards of 40 inches of snow in some areas. after the white house declared a state of emergency in the nutmeg state. the governor is asking all nonessential workers to stay home off the roads. boston schools remain closed today. they were socked with two feet of snow. a big focus is getting transportation up and running. >> we're working very hard to make sure that the t is fully functional by the morning commute. utilities seem to be making progress. >> they are making some progress. over the weekend, nearly 700,000 customers in the northeast lost power. at this hour utilities are reporting about 135,000 still out. more than 110,000 in massachusetts, hardest hit. rhode island still close to 20,000. new york, over 2,000 with power out. 1,600 in connecticut. carl, i can tell you, folks in long island, socked by sandy, will be watching the clock to see how long it will take for them to get back online. >> yeah, the confluence really,
even though they were separated by some months, those two storms, incredible. thanks a lot, bertha. a massachusetts utility on power restoration efforts on the cnbc newsline is mike duran with penn star serving more than 1 million customers in massachusetts, including the boston area. mike, good morning to you. >> good morning. >> report card this morning? >> well, fortunately we've made great progress since yesterday. we lowered the number of customers without power by about 100,000. we still have roughly 85,000 customers without power now. so there's a long way to go. we're concentrating our efforts in the areas in massachusetts along the south shore, cape cod and in the greater new bedford area. that's where most of the outages are right now. >> are the recovery efforts at all affected by sandy, which as i said earlier, is obviously a few months removed from us by now? >> for us, no, they aren't. we're certainly dealing with some very difficult conditions, even still. for example, on cape cod, when
this storm had passed for everyone else, it was still raging. it was not safe to get out there to do a lot of work. right now, though, even though the storm has somewhat long passed, we're dealing with access issues. and quite extensive damage. >> yeah. and i think for anybody who's in the northeast, two of the characteristics about this storm, obviously the depth of the snowfall, but how heavy the snow was, right? >> that's absolutely right. now we're looking at the possibility of rain. the likelihood of rain today, which would likely cause some additional damage to our system. because the trees are just so heavy with snow right now. adding any weight to them is probably going to be an issue. >> was it any easier, or faster, the process of bringing in crews to back you up from other parts of the country? >> we were able to bring in crews from long distances prior to the storm, fortunately. because their areas were not subjected to the problems that we were going to have.
we brought in crews from as far away as wisconsin, illinois, georgia. after the storm had passed, and areas a little more local knew that they were okay, then we started getting additional crews in from new hampshire, from western mass, connecticut, and even as far away as quebec. we have about 100 workers from quebec helping us right now. >> as you point out, the rain doesn't make it any easier today. thanks for your time. >> thank you. >> mike dur as and from nstar. the biggest charitable donors for 2012. the list has familiar names to it. watch the special coverage of the president's state of the union address tomorrow night 9:00 p.m. eastern time. back in a minute. recognize me.
resignation. who knew that was possible. and we'll check the technicals on google. that's in the next hour. a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪
today is gonna be an sometimportant day for us.? you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers.
happy monday. welcome back to "squawk on the street." we'll begin with tech. jim short sounding the alarm of the apple bulls who screamed buy before the stock went down. we'll find out how many analysts failed to see that. pope benedict will resign at the end of the month citing health concerns. what does it mean for the vatican and who could be next. google shares down after hitting an all-time high last week, surging over 10% since the beginning of the year. are the charts pointing to more of a pullback ahead. first, a lot of news out on tech this morning. certainly over the weekend we found google executive chairman eric schmidt is selling roughly 42% of his stake in google, in a move that could net him more than $2.5 billion. jon fortt has more from san jose. he joins us live. is it a surprise that schmidt
should be such a heavy seller now? >> maybe a little bit of a surprise. not as big as the pope saying he's on his way out. but schmidt owns about 7.6 million shares of google stock, filed to set up 2.3 million of those over the course of one year. this is important in part because schmidt has 8.2% of the voting power in google stock. it's interesting because it comes at a time when schmidt's influence seems to be on the wane a bit. schmidt was brought in as ceo to be adult supervision 12 years ago. but since then the co-founders have grown up. co-founder brin's more futuristic pursuits seem better than ever. with page steering the ship nearly over two years, google hasn't missed a beat. one of schmidt's specialties, government relations, isn't quite as intense as it used to
be, google ending a two-year search from the ftc with a settlement. it looks like google has a bit more breathing room in that arena. interesting to note here, schmidt, now the executive chairman, is one of the nonfounder ceos to become a billionaire leaving a company. he led google through its formative years. meg whitman pulled off that beat at ebay. >> it's obvious the man who want to diversify his wealth. but i do want to mention something from left field. because some of us remember when the honeywell gte deal was blocked. we remember the problems that microsoft had in europe. the front page of the financial "times" today, vivian redding is set to cause some of these companies like google a little bit of difficulty if she pushes across europe the privacy rules. she said she will not be put off course by america, the politicians or indeed the huge
lobbying efforts in brussels even as we speak. significant potentially for the stock, jon, or not, a side show? >> definitely significant. you look at microsoft, as you mentioned, you look at intel. so many of these u.s. companies sort of run aground in europe, when it comes to regulation. microsoft recently getting into trouble for not complying with some things that they agreed to do with windows, to sort of make the playing field more level there. this privacy issue, important not just for google, also facebook, so many other companies that are trying to make money on advertising, we'll have to see how they're able to navigate that. not much about apiecing u.s. regulators, you've got to deal with europe more and more. >> they seem to have washington on their side. jon, for the moment, thank you. now to an article on apple getting a lot of buzz out there. jim stewart with "the new york times" out with an article to
explore how tech analysts were so wrong on apple. jim, great to have you with us. >> thank you. >> back in the day, we used to play the video of all the penguins jumping into the water. it seems we have to dust that video off once again, because it seems like it was a case of classic herd mentality here. >> absolutely. i went back and looked at the tape to see how many analysts had a buy recommendation on it. it was overwhelmingly buy and strong buy. you know, i don't expect people to be able to pick an absolute top. but it was so -- it was nowhere close. there was one guy who changed his amation a little bit after, very well timed call. but i would have thought that the random of assortment, you would have seen some people happening to shift gears somewhere near the peak. absolutely nobody. that got me questioning, well, why is it? i thought this was all supposed to have been changed, by the global settlement that everybody was now independent, that they weren't affected by conflict of interest, they would be more
courageous. but i was seeing the same old herd instinct all over again. >> are they not good at doing their jobs, jim? >> no. first of all, let's just face it, the obvious investment banking conflicts where they were toughening up ipos, people said that pretty much -- has been cured. but there's a trading death problem. if you put out a buy recommendation, the world can then buy and generate trading commissions. so there's still the conflict. i don't think it's really conflicts that explain this. i think it's much more psychological. i remember today after i questioned the graphic growth of apple stock, a little prematurely, really, but last year, and i came on your show to talk about it, i couldn't believe the hostile reaction i got. i was getting cornered in the elevator at my building by people saying, how could you say that, this is the greatest stock
i've ever had, i'm going to retire on this. when you start feeling like that, when you're so devoted by a stock always going up, that's a problem. they didn't want to hear it. there was tremendous pressure. people pointed out to me, you know, you really get in trouble if you're the one lone outlier and you turn out to be wrong. there's a protective instinct to stick with the herd. >> jim, when i rolled that penguin video, 17 years ago, of course, all the conflicts were involved. we couldn't find lendings, by the way. that's why i didn't use them. but i would point to one other, and i want to get your take on it, which is maybe not the case in apple so much, a lot of analysts are still, as we watch that old video, concerned about saying something negative about a company because they get cut off from the information flow. and that can hurt them as well in terms of determining what earnings may be, which we all know if we ever listen to a conference call, seems to be their main mandate, trying to figure out what earnings are going to be for companies. there is that idea of
information flow as well if you are negative. >> that's right. and i think apple actually is a pretty good example of that. it's famously thin-skinned about people who do not sort of tow the party line. one thing that the people told me that -- and they made a good point, is that as a consumer, if you get these reports, you know, skip the recommendations. just ignore the buy/sell/hold, all that. bear down on what they're actually saying. if you ignore the recommendation, that they do come up with a lot of good information. i don't mean to slam analysts, some of them are very smart, they do get information, but there tends to be a disconnect from the actual facts in their reports. and there's a lot of pressure, subtle and not so subtle, to be positive on the recommendation, but sometimes what you read is nout all that bullish. >> jim, you do interview carlo becenius, whose target is now 320. >> 320, dropped it to 320. i got an email from him today.
>> you say it's a mix of technical and fundamental concerns. did he give you any clarity beyond the fact that steve jobs was once arrogant? >> yes, he gave me enough to -- i could have written a small encyclopedia article on it. he had a massive amount of information he had done. i'm not a technician, he had very elaborate studies of trading patterns. i'm sure you people know about that than i do. and where is the big growth going to come from. i mean, apple talks about this great pipeline. but what's really in it. >> that is the point. i read your article. it's a very interesting essay. it's a very important essay on conflicts of interest and herd mentality. i'm not sure you've made the connection to what happened -- you know, sometimes things happen. and suddenly to many people it went from a growth stock to a value stock. and the way in which people
rated it, as you know, can almost come from left field. you're not actually making -- you're not saying there's blame for what happened, surely. >> no, no, i'm not. absolutely not. they're not the cause of it. and after all, i did point out in the article that all these bullish analysts were right. they were absolutely right. month after month after month. that tends to be a powerful self-enforcing thing. like i had questioned growth of it. but i was very early. if i was an analyst, people would be saying, what are you saying that for? what i was looking for here was some signs of independence, a willingness, right or wrong, to diverge. one of the economists i talked to at columbia said, what is so striking about it is there is a high level of uncertainty about predicting the future of apple right now. is it a value play, is it a growth play. so you would expect a dispersion of analysis from a group of analysts. yet there's a tremendous
unanimity. and that seemed puzzling and worrisome. >> now the herd is a little more skeptical of apple at this point, is it safe to maybe assume that contrary indicators, now that apple is on an upswing? >> isn't it funny that you hear all these experts that are supposed to be sophisticated about the market, they're all bullish at the peak, and now the price is down, you know, 30 some percent, now they're having second thoughts. well, by that analysis you would think it just went on sale, now it's a bargain. there's still a range of estimates. even at 320, which is, you know, kind of the low end of all the estimates, the drop isn't going to be as big as it just was. obviously i think it's safe probably to buy now, with hindsight, than it was at the peak. >> jim, thanks for calling in. great to have you with us. james stewart at "the new york
times." >> thank you. a wristwatch with the functions of a smartphone. what can apple do to a watch to t trn its for turns around? tweet us. i wanted to point out shares of jenneron pharmaceutical. up over 7%. this morning under hart scott regenerron, buying more shares in the open market, through open market purchases. and so they have filed under the hsr act notifying them. i think they already own 17% or so of the company. there is a stand-still agreement that santa fe is bound by the not buy more than 30% of regeneron. the two companies already do have a partnership that was part of -- one reason why this is being noted, and why the stand still is in place. that's since 2007.
they collaborated to discover antibodies. that collaboration was expanded in '09. and goes until at least 2017, i believe, reading from some of the filings of regeneron. there's that stand still in place. speaking of stocks that have risen 30%, shares of google hit another all-time high on friday. up 30% in the past year alone. so after the big rally, is there more room to run, or is eric schmidt right to pull out as he appears to be doing. we check the technicals on google next. want to know who the 50 most generous charity givers were last year? we've got the names. and we're checking them twice. [ male announcer ] this is not my home.
there. i said it. they don't have pictures of my kids. they don't have my yoga mat. and still, i feel at home. could it be the flat screen tv? the not so mini fridge? ♪ the different free dinner almost every weeknight? or maybe, it's all of the above. and all the rest. am i home? nope. but it almost feels that way. homewood suites by hilton. be at home. [ engine turns over ] [ male announcer ] we created the luxury crossover and kept turning the page, writing the next chapter for the rx and lexus. this is the pursuit of perfection.
all-time high on friday, but retreating today on the news that eric schmidt is selling some of his shares in the company. let's bring in mark newton, the chief market analyst. this is one of the strongest technology stocks in the s&p 500 this year. >> the stock has been -- has had an incredible run over the last few months. i'm still bullish on this stock. there are a couple of things that are important. the stock structurally recently started to improve quite a bit
last august when we saw, as we called the stock range-bound for the last few years. as we started to move from new highs, retested the all-time highs at 2007. we pulled back. and recently we've just managed to move above this prior high. this is really a structurally sound stock right here. yes, we eventually need a momentum to confirm this move, but right now when you've tested all-time highs, you pull back to an area that needed to hold at this multi-year base, i think the stock could get up to as high as 850 to 880. >> for those looking to get in, who want to get up to that level, does this bottom line imply that the stock can only fall to here? that that is support in the stock? >> i think initially we want to see this most recent low hold in the stock. but in general, it might be natural to see a little bit of consolidation. the fact that we've gotten above this prior high which is 775 puts the stock in an excellent position technically in my view. >> in terms of the volume
questions, is that because people are unwilling to get in because of the pullback? if you see the volume come in the stock, that would imply people believe the stock will move higher? >> that's a good question. but i think in general, at some point you want to see the volume confirm the new highs. initially you test the level, you pull back. it's important to see volume confirm a move. >> how important in your view, and this may not necessarily be a technical question, but the pullback in apple coinciding with the run higher in google as well as amazon shares. >> apple's pullback, over 30% in the past five months. it's actually at levels that are structurally more important technically. the stock was in really a multi-year uptrend. we began to go parabolic. it's pulled back to levels that makes the stock a lot more attractive, relative to maybe a lot within technology. so you see a short-term chart in september. my thinking is this level near 500, which really joins this downtrend since last september, is going to be quite important.
i think we go to at least 665, you know, 565, and up near 595 to 600 would be a legitimate target to expect the stock to move. >> we were talking to james stewart of "the new york times" in the last segment. the last chart looks like according to your charts, the last one we showed viewers, it looked like the stock was getting a little exhausted right around here. which is the end of 2012. exactly when it started to pull back. is that what you're seeing back then? >> i was on the show a couple times back here with the stock peaking out. the volume didn't really confirm this new move to new highs. last spring the stock had really good volume and good rep. it pulled back, moved to new highs. the volume dried up. we started to see momentum roll over a little bit. this is a decent base, i think. the recent lows really need to hold. i think under 437, if it does that, it's likely to pull back to 390 or so. but i think it's a good risk/reward in all of technology. technology has been under
relentless pressure from last september. that's almost a better area to look, versus looking at financials, industrials, consumer discretionary all at multiyear highs. >> so to the underperforming sector of the s&p 500. >> showing more signs of stabilizing, which i think is positive. >> mark newton of greywolf. carl? when we come back, the biggest charitable donors for 2012. who reached into their pockets the deepest and where did it go. tim cook is said to speak tomorrow at the internet conference. what must he say to turn the tide as mark and melissa have just talked about.
[ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%...
and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. omnipotent of opportunity. you know how to mix business... with business. and you...rent from national. because only national lets you choose any car in the aisle. and go. you can even take a full-size or above. and still pay the mid-size price. i could get used to this. [ male announcer ] yes, you could business pro. yes, you could. go national. go like a pro. yes, you could. how do you keep an older car running like new? you ask a ford customer. when they tell you that you need your oil changed you got to bring it in. if your tires need to be rotated, you have to get that done as well. jackie, tell me why somebody should bring they're car here to the ford dealership for service instead of any one of those other places out there. they are going to take care of my car because this is where it came from.
price is right no problem, they make you feel like you're a family. get a synthetic blend oil change, tire rotation and much more, $29.95 after $10.00 rebate. if you take care of your car your car will take care of you. the least of the biggest charitable donors is out. who were the most generous when it came to digging into their own pockets? robert frank joins us now to explain. what are the names? >> simon, we would call 2012 the year of nerd philanthropy. the top 50 givers list came out this morning, compiled by the
chronicle of philanthropist. three of the top five are under 40 years old this year. that's the largest ever. now, facebook founder mark zuckerberg and his wife are in second place, they gave close to $500 million to the silicon valley community foundation. john arnold, he and his wife gave $423 million to their foundation. the google co-founder gave $223 million to his foundation. it marks a new kind of, quote, nerd philanthropy. they're putting their money towards science technology and data projects to help solve the world's problems of the putting of their money. >> a phenomenal amounts of money. >> what's interesting is, they're very quiet about it. they're not doings -- getting
buildings named after them or business schools. they're focused on what science and measurement and data can achieve. which is different from the previous generation, which is writing a check to the red cross, or building another building. >> they believe technology can change the world. >> they've seen it in markets and now they're going to see whether it's poverty, health care, education, you know, remains to be seen. but it is a staggering amount of money. these three folks under 40, nearly $1 billion just last year. >> the main beneficiaries are ngos, or higher education? >> a couple of them have their own foundations. so that's money that's been put into that foundation for later distribution and grants. a lot of that will go to medical research. in the case of zuckerberg, he gave it to the silicon valley community foundation which is very unusual. a lot of small community foundations got huge amounts of money last year because people are going local with their fi philanthro philanthropy. what can we do locally, whether it's health care, immigration, which is big for silicon valley,
to improve the local community, which is a big shift. >> a lot more money behind silicon valley. eric schmidt, could be selling $2.5 billion worth of stock. what is the thinking culturally out there in terms of giving? have many of them signed the giving pledge where they're going to put aside 50%, even if they aren't doing it now? >> they're getting there. you certainly see it among the older folks, whether it's eric schmidt, these guys, that first generation, bill gates, of course, the father of nerd philanthropy. we're finally seeing that under 40, the next generation web 2.0 coming onboard. that's a great sign for philanthropy. >> often when people give money like this, it's to flatter their tax field. they take a lot of money out of the company. but i'm imagining here, despite the fact a lot of people did take money out last year, for tax reasons, these figures are too big for that. it's too big. not on the same scale. >> no, they were ready to make a statement and they were ready to really fund the big cause.
while they're young. we often see people wait until they're 60 or 70. right now they say, i want to measure this and hold people accountable. chances are they'll have better success because of that. >> robert, thank you very much. >> thank you. the s&p 500 coming off a six-week winning streak as the dow sits at just 7 points below 14,000. as we kick off a new week, could we be in store for a pullback. how do traders using technical analysis streamline their process? at fidelity, we do it by merging two tools into one. combining your customized charts with leading-edge analysis tools from recognia so you can quickly spot key trends and possible entry and exit points. we like this idea so much that we've applied for a patent. i'm colin beck of fidelity investments. our integrated technical analysis is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
7:30 on the west coast, 10:30 on wall street. the fda refusing to approve a new long-acting insulin drug until it conducts potential heart risks. hershey all-time highs. the chocolate maker up 35% in the past 12 months. icahn enterprises announcing it is nearly tripled its annual dividends to $4. red arrows across the board this morning for the major averages. s&p struggling to keep the six-week winning streak going. it hasn't done that since 1967. what is next for the market? brian joins us here at post 9,
joining us, chief investment strategist. brian, welcome. >> thanks for having us. >> does the win of straight winning streaks give you any concern at all we're a little lofty here? >> a little bit. many investors have once again missed this move. and so many of them are trying to forecast a pullback. i think it's really difficult, carl, to pick and point where the market's going to pullback. i think that's why we have to kind of get into longer term investing, creating wealth and stop to market time the market. >> this has, no, you would agree, this has been pretty stellar where we are. >> right. >> the point's been made it does take repeated attempts to break through the levels that we were talking about, 1515. >> from a near term basis, there are several positive things going on, the economic data more positive. positive equity flows. but longer term, the fundamental concept of the u.s. market looks very, very timely from a three to five-year basis. near term, we may be a little ahead of ourselves. >> in terms of your overweight sectors, i noticed information
technology, your target weight is 21%. it has been an underperforming sector in the s&p 500. so i'm wondering, are you seeing a rotation in technology at this point or was this allocation here since the start of the year? >> great question. it has been since the start of the year. we did a chart in one of our pieces called u.s. month in pictures. we stripped out apple out of the technology sector. and if you do that, the tech sector is doing very well. we think many investors are extrapolating the perceived or not perceived issues of apple on the entire sector. by far, it is the most hated sector on a sentiment basis across all platforms, growth, value, u.s., canadian, international investors. they hate technology. >> brian, can we just pull back and say something bigger about where we're going? today the journal has a front page article in which it asks if this long-term bear market, over 13 years, has finally come to an end. and if we're going into a major
bull market called the secular bull market, last time we did that, you've got average returns of 18% each year. >> right. >> are we about to embark on decades of that? is that a possibility in your view? >> it's a very strong possibility, especially considering where fundamentals are for equities versus bonds. remember, bonds, were the class of choice. bonds and bond funds is where investors were putting their money since 2009. most bull markets and equities start when the hatred factor is really high, which clearly it is. all we've been doing is unwipeding the equity trade. 2009 in our view wasn't a bull market. the cycle we think started in august of 2011. then we started to finally buy stocks based on fundamentals. >> so you trigger a bull market when the hatred is at its most, you don't mean now, you mean march 2009. >> i think that's where it peaked. really we washed out some of that the next two years following that. but really, where we had the
excess acceleration, simon, into bond funds was really august of 2011. that's where it was super late to be buying bond funds and super late to be selling equity funds. we think we're entering into an 82 to 90 type bull market that could be 15 to 18 years in the making. >> wow. really? that long? >> yes. think about it, it will take five years to get people to buy into it. >> we keep hearing about clients, hey, i noticed stocks are up. tell me more. characterize their level of enthusiasm, or their lack of enthusiasm still. >> well, when you go to your kids' sporting events, they're still talking about bonds, and probably still talking about gold and their china trades. no one talking about u.s. investing. no one talking about equities. think about equities, it's part of the 1%ers, evil wall street, evil ceos. that construct with respect to psychology remains extremely negative. when you pair that with the
fundamentals, that's where you can be very contrarian. from a growth basis, we think stocks are teed up to perform at 18% returns, we think we're entering a goldilocks period return from a gdp standpoint, interest rate standpoint, and stock standpoint will be subdued relative to history, but that's a great area for stock. >> if we overlay value over growth, technology is your highest weighting. give us an example of what falls in that basket. >> well, things that actually, when you look at value, melissa, it's counterintuitive. you want to buy value when growth is accelerating. growth works when growth is sparse. that's really in the last three years. the next -- we think the next five to seven years will be characterized by those companies at attractive valuation in showing improving growth. that's really a value character. sectors like industrials,
energy, and of course, technology fits that bill. there are other select stocks in other sectors. >> thanks, brian. >> thanks. the etf business is booming jumping nearly 25% last year. a record $1.4 trillion is parked in u.s. etfs right now. today on cnbc all day today, we've got a special look at the latest developments. bob pisani is on the ground at inside etfs in florida, the largest etf conference in the world. he's here to tell us why investors are so hot for these thunder. bob? >> hello, melissa. exchange traded funds, or etfs are attracting a lot of assets now. stocks to bonds to commodities. you might be wondering, what is an etf? an exchange traded fund, or etf, is a fund that holds stocks, bonds or commodities. most etfs track indexes like the s&p 500.
but you can invest in almost any asset class. tech stocks, industrial stocks, municipal bonds, japanese stocks, physical gold or silver. the big attraction is unlike mutual funds, etfs trade like stocks. they can be bought and sold during the trading day. etfs are also more tax efficient. and usually have lower costs than mutual funds. thanks to these advantages, investments in etfs have surged in the last few years. at the end of 2012 there were close to 1,300 funds in the u.s. with a combined value of $1.3 trillion. that's only about one-tenth of the money in mutual funds, but it's jumping quickly, up 25% last year. trading in etfs is growing fast as well. they now account for 16% of the volume of stocks listed at the new york stock exchange. but the etf experience is not flawless. now, mat hogan from index universe is the organizer of this conference of the i asked
him, what exactly keeps him up at night. >> i worry about investors buying products they don't understand, getting exposure to things that don't give them the returns they think they're getting, and therefore, souring their opinion on etfs when the vast majority are doing exactly what they said they should do. >> hogan specifically said that volatility etfs which track variations on the vix, were inappropriate products for retail investors. the hot topics, number one, international bond investing. there's really big demand right now for products outside the united states. as for when and if the u.s. bond market will deflate, the opinions are divided here of the but bond etf flows are considered a very good canary in the coal mine. the money is continuing to go into bond etfs in january but at a greatly reduced rate. almost all etfs are tied to indexes. but some insist there's room for active management here.
one issue is transparency. and whether these active managing etfs will be required to post all their positions on a daily basis. more exclusive etf one tent on et etf.cnb.com. do you think equities, bonds, international markets? tweet me. guys, back to you. >> we'll see a lot more of you throughout the day. bob, for the moment, thank you. let's get a "market flash" now. >> check out mason, enjoying a pop this morning, up about 2%. the news disclosing a 5% stake. they reported a stake of some 3% and indicating about a 1% stake as of september 30th. legg mason reporting above what they were in december. legg mason up about 8% so far
this year. carl, back to you. >> josh, thanks a lot. when we come back, a carnival cruiseship in the gulf of mexico, more than 4,200 passengers and crew towed to port. with another accident in the books, what does it mean for the cruise industry? don't miss our coverage of the state of the union address tomorrow night, live coverage kicks off at 9:00 p.m. eastern time. investor. yeah, i'm a serious investor but i'm a busy guy. it used to be easier but now there are more choices than ever. i want to know exactly what i am investing in. i want to know exactly how much i'm paying. i want to use the same stuff the big guys use. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.
is moving backward. [ engine turns over, tires squeal ] and you'll find advanced safety technology like an available heads-up display on the 2013 lexus gs. there's no going back. tdd# 1-800-345-2550 when the spx crossed above its 50-day moving average, tdd# 1-800-345-2550 i saw the trend. tdd# 1-800-345-2550 it looked really strong. tdd# 1-800-345-2550 and i jumped right on it. tdd# 1-800-345-2550 tdd# 1-800-345-2550 since i've switched to charles schwab... tdd# 1-800-345-2550 ...i've been finding opportunities like this tdd# 1-800-345-2550 a lot more easily. tdd# 1-800-345-2550 like today, tdd# 1-800-345-2550 i was using their streetsmart edge trading platform tdd# 1-800-345-2550 and i saw a double bottom form. tdd# 1-800-345-2550 i called one of their trading specialists tdd# 1-800-345-2550 and i bounced a few ideas off of him. tdd# 1-800-345-2550 they're always there for me. tdd# 1-800-345-2550 and i've got tools that let me customize my charts tdd# 1-800-345-2550 and search for patterns as they happen. tdd# 1-800-345-2550 plus webinars, tdd# 1-800-345-2550 live workshops, tdd# 1-800-345-2550 research. tdd# 1-800-345-2550 whatever i need. tdd# 1-800-345-2550 so when that double bottom showed up, tdd# 1-800-345-2550 i was ready to make my move. tdd# 1-800-345-2550 all for $8.95 a trade.
tdd# 1-800-345-2550 can you believe it? tdd# 1-800-345-2550 i love it when you talk chart patterns. tdd# 1-800-345-2550 trade up to 6 months commission-free tdd# 1-800-345-2550 with a $50,000 deposit. tdd# 1-800-345-2550 call 1-877-656-8765 tdd# 1-800-345-2550 and open an account, tdd# 1-800-345-2550 now with no trade minimums. a hairline fracture to the mandible and contusions to the metacarpus. what do you see? um, i see a duck. be more specific. i see the aflac duck. i see the aflac duck out of work and not making any money. i see him moving in with his parents and selling bootleg dvds out of the back of a van. dude, that's your life. remember, aflac will give him cash to help cover his rent, car payments and keep everything as normal as possible. i see lunch. [ monitor beeping ] let's move on. [ male announcer ] find out what a hospital stay could really cost you at aflac.com. i'm up next, but now i'm singing the heartburn blues. hold on, prilosec isn't for fast relief. cue up alka-seltzer. it stops heartburn fast. ♪ oh what a relief it is!
it could take two, maybe three days for a carnival cruise ship currently in the gulf of mexico to be towed to port after an engine fire left it drifting with more than 4,000 passengers and crew onboard. could this engine mishap affect your portfolio. rachel rothman is at susquehanna financial group. rachel, welcome to the program. you know, this is not great
timing. almost one year after carnival had a ship run aground off the italian coast. but again, to have a major accident like this at a crucial time for bookings for the cruise ship industry. this is the season, is it not. >> you have a good point. if you have what is considered a minor incident of this point at any other point of the year, it would probably be a nonevent. but given that it is taking place in the all-important wave season which spans from january through march, which accounts for about 35% of bookings, and up to 50% of revenues for the year, it is unfortunate timing for them. >> you know, investment community seems sanguine about it. at citigroup they said that historically they said there's little to no impact on business if nobody dies. when there was a fire in february, no significant impact, november 2010, a similar incident and no impact. would you agree with that? >> i think that an incident of
this magnitude is not that material. i would agree with him in that sense. i would also say, though, unfortunately there have been a number of headlines in recent times, and these types of things do stick out in people's minds. even if you were to have a pause in bookings, even for just a couple of days, given that it is such a critical juncture, i think it isn't great timing. >> yeah, i saw that you had a proprietary survey out of pricing power within the industry quite recently. actually, you thought that -- and pricing equals margin equals profit equals share price moves. you said that you thought they were okay with a 5% price increase, but the big question was whether suddenly prices could surge higher in the second quarter. a lot of managements, talking not just about carnival, but rcl and ncl, a lot of managements were guiding higher. do you think that is now in question? >> the real issue is going to come down to the third quarter, which for the cruise industry
accounts for about 70% of profits. so you do see strong pricing in the first quarter right now, because those are traditionally caribbean sailings. they're short haul destinations. that's the strongest region. the weakest region has been europe, which as we know in the wake of the financial crisis over there, and of course the costa concordia. the problem is the european cruises are booked right now. so you have very limited visibility into the third quarter, and again, that's going to be 70% of profits. i don't think this is such a huge issue. i just don't think it's -- it's certainly not going to help. it will give people a reason to pause before booking. >> rachael, good to see you. thank you for your time. rachael there from susquehanna. let's send it over to josh lipton on the stock story. >> well, starz is soaring this morning. here's your news. a new long-term content deal, starz will now have the exclusive pay tv rights to
sony's think at trick al releases through 2021. the previous agreement had covered film releases just through 2016. analysts at btig telling cnbc that they were very concerned that starz was going to lose sony movie rights like they did with disney. so they say this is a meaningful win for starz. investors seem to agree. simon, back to you. >> thank you very much, josh. earlier in the program jim stewart was blasting analysts for the way they covered apple. you won't want to miss what rick santelli has to say after the break as he lays out the risks following the herd mentality in full action. try running four.ning a restaurant is hard,
fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase. abecause what you don't know can abouhurt you.ce. what if you didn't know that boxes by the curb... make you a target for thieves? or that dog bites account for a third of all home liability claims? what if you didn't know that one in seven drivers is uninsured? and that grease fires have to be smothered? the more you know, the better you can plan for whats ahead. get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum ♪
jcpenney ceo spending apparently less than a full work week, according to the "new york post" here. they said the former apple executive uses a company jet to fly back and forth from his home in palo alto, california, stays in the ritz when in town for work. courtney reagan interviewed him last week. take a listen. >> i probably spend more time with our team creating our future than any ceo in america spends with their team.
>> where i live has no impact on the quality of our execution. >> here they've got him at the ritz-carlton robe. which i would wear if i was staying at the ritz-carlton, too. the issue of the design meeting, talking about in this case, it's actually a private label at pennies, who said he's always in design meetings. pretty convenient it's always on a friday. hard to believe we're talking about it. but i think it's important because it comes back to the central question of, do they understand who the jcpenney customer is. probably a woman of a certain age who wants to buy a pair of jeans for less than $50. if he's in design meetings, he may not understand that that is actually what jcpenney has
traditionally been and what is he going to do now for them. >> i don't think anybody would give a hoot where he lives. >> the sales are not performing. >> either way, with the sales better, the stock would be better. with the company performing, nobody would care what he does on a friday, whether it be design meetings, or at the pool at the ritz. nobody would give a hoot. >> well, if comps go positive this year as he said they will, then the stock will react. it's a big if. let's get to rick santelli for the santelli . >> i was so happy that we had james b. stewart on from the "new york times" discussing that wonderful article following a herd of bulls on apple. the only thing is i'm going to take you in a bit of a different direction. you'll get the picture here momentarily. what's always so fascinating about these stories is that the average investor, even our
listeners and viewers, of course, have time restrictions, many of them do, they have jobs and families and responsibilities, so they depend on analysts and they depend on our network to try to lead them to the promise land of investing. but as james b. stewart points out in this article, sometimes the herd mentality does a lot of harm in the end. i want to read a couple of quotes hereby some of the professors, academic source in this article. the first one is professor greenwald. here's some of the things he said. analysts have a tendency to have the audience hear what it wants to hear. they are in the end sales people and their credibility depends not upsetling their investor as to much. there was also another professor quoted, professor cadan's comments, analysts tend to herd.
either you get a big price if you're right or lose your job. analysts need to be courageous to say something different from most other analysts. here's where we take a you turn. forget about apple and look at people who cover politics. at least ten people came up to me and said they had the same notion, why item doing the rick santelli in this light. whether tax or deficits, it seems as though james stewart needs to go to a lot of different media and explain the herd mentality. just look at debt and deficits, i am not picking on the "new york times." we know the "new york times" for the most side will side with the progressive liberals and other papers go the other way. the point is in five, 10 years the deficits completely blow up,
as mr. stewart point out since nobody went the other way, there's safety in numbers. when it all goes down the tube, my gosh, what a surprise. get everybody that covers politics to kick the tire. consider they may not know the outcome as intensely and as positively as those analysts that you depicted on apple. it just amazes me he is so correct on apple but many reporters that cover politics are so blinded by the notion that they're speeding down a highway and they have no idea there may be cars going the other way. back to you. >> rick santelli, thank you. apple is reportedly experimenting with wristwatches that have the function of a smartphone. that brings us to the squawk on the tweet. what can apple do to turn its function is a round? we have your responds next. i'm a conservative investor.
but that doesn't mean i don't want to make money. i love making money. i try to be smart with my investments. i also try to keep my costs down. what's your plan? ishares. low cost and tax efficient. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.
with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall...
here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location. "squawk" on the tweet. apple is reportedly experimenting with wristwatches that have some kind of function with the smartphone. on the "squawk" on the tweet, we're asking what can am do to a watch to turn its fortunes
around. apple can use it like a dog collar. any time someone tries to sell the stock, it shocks them. f turning back time to when it was the largest company on earth. if samsung designs it, it will be a hit. samsung is really cool because they believe unlike apple consumers do know what they want and what they're trying to give them. >> what a novel idea. >> yes. >> apple's way of thinking what the consumers would want, they just don't know it yet and got them to the heights they've seen. >> if they do invent a time machine what the second tweet suggested, i think the stock will become the biggest stock in the world. >> if that's what they need to do, a tall order. >> and tim cook is speaking at the goldman technology conference tomorrow. the scheduled time for 4:15 p.m. after the bell. we'll see. it brings on margins and a lot
more. >> which is more important, tim cook or the state of the union? >> tim cook. >> for our hurps, cook is the story. what's coming up tonight? >> saying institutional shareholders are getting back into apple, what we've seen since the bottom in the stock so far this year. we'll get the color from that. ed morse from citi will give us his forecast. a lot to cover tonight at 5:00. >> we'll talk finance ministers in a few minutes. >> oh, yes. >> we've not gotten there yet. if you're just joining us this morning, here's what you missed. welcome to hour three of "squawk on the street." here's what's happening so far. >> that announcement being confirmed from the vatican, pope benedict is due to resign february the 28th. >> uncertainty in the economy and sluggishness in the economy gives you center of a friendly
fact. >> we did a lousy job in january on the tax side. i think it's better to go over the cliff than do a lousy job. >> rarely to these -- rarely do these oppositions result in a deal being voted down. it is something at least worthy of keeping an eye on. >> president obama seems to have pulled the republicans fangs with respect to the debt ceiling. that's probably the big risk the market was worried about. >> all night long, this is what it heard. beep, beep, beep. yes. snow plows. >> this is the opening bell on monday morning. >> just ignore the buy sell hold and bear down on what they're actually saying. if you ignore the recommendation, they do come up with a lot of good information. >> the stock has had an incredible run the last few
months. i'm still bullish on this stock technically. i think it's premature to be bearish or sell shares here. >> good morning. we're live on the new york stock exchange. dow indexes all struggling to get out of the red territory. and something it has not done since the start of the year. and aol increasing its price target from 45 to 40. and blackberry says it will replace thousands of phones for its corporate managers, a big loss on the ent"enterprise" fro as home depot makes those changes. and tim cook speaks of the goldman sachs tech conference tomorrow and find out if there's
truth to the rumors and when to see the products hit stores. pope benedict xvi announcing he will resign february 28th and what it means for the catholic church and who might be next in line. and taking a big data approach to shopping. lyst helping shoppers to thousands of virtual clothes rack to see what they want and the funding and what's next for the company. and wearable computing testing wristwatch devices that would function in part like a smartphone. you might recall, recently spoke with pebble, that developed its own smart watch about the future of wearable computing. take a listen. >> i think what you will see over the next year or two is more and more accessorieses. >>ing the smartphone as a central connection to the internet. >> dan, nice to see you.
nice to have a little buzz on products in this academy because people have been hungry for so long. what do you think they're up to? >> absolutely. we have seen a couple of reports about this watch. i can't imagine people have a big category i need a new digital watch. it does fall along with the eyeglasses and wearable tech but can't imagine it's a super mainstream kind of product. wonder the capability, you're making something small enough to fit counterfeitb bcom your wrist, how will it compare to the iphone that's gotten larger in terms of screen width and wider. >> and you can make it where you don't need a really big screen on it or like the pebble guy pointed out communicate with your iphone and hopefully you can have an iphone and i-watch and work together in sync. >> we have hints of these other products. microsoft rolled out a concept
at ces. everybody knows about the google glasses. i haven't heard, maybe because i haven't been in tune with it as much, apple give clues that's where they're headed. have they? >> apple really doesn't do that. usually when we hear a rumor about a product apple is working on, it comes from suppliers who say apple needs this kind of screen and this size, maybe this is what they're working on. there have been separate reports of this i-watch and people talking about this concept of wearable tech, a hot area to experiment in. not everything apple does has to be a huge blockbuster. they have areas like hobbies like the apple tv set top box. >> tim cook speaking at goldman tomorrow, this is a question for sure if he does take q & a. i wonder how seriously the reports that have come through sources at a supplier, how seriously are these being taken
by cnet and folks you talk to. >> i think you have to take any supplier report about apple seriously. the rumors about am are wrong as often as they are right. you really can't take it to the bank and like what tim cook is doing tomorrow, they don't do product announcements or hardware news. >> it coincides with a change, very slight but a small change in character for the company, issuing a press release to defend themselves last week and they've been selectively reaching out to the press because the stock has been under such pressure. are you seeing that? is there method of communication evolving because of things they've had to deal with? >> i feel there is a slight line in that apple wall where they're protective and secretive and like to control the conversation when they talk to the press including myself and my colleagues and with tim cook, i think there's been a softening
of that wall and that apple needs that as the iphone and other products get more mature. >> if this is all true, it would probably mark, wouldn't you say, the first evolution in the pipeline under cook's watch? ipad and iphone and everything before that have been vestiges of the job's era. this would be one he owns completely. >> it would be but if it comes out fairly soon, there's a reasonably good chance it was something steve jobs had been working on the last couple of years because he did leave a fairly long road map of new products. >> finally, faber and i were talking this morning about the nike fuel band. i haven't put it on yesterday, i wonder the things you see at cnet, was there evidence, this was your first comment in this segment, is there the demand for something like this, especially if it comes from pewer house like apple?
>> i think a general interest wearable tech item like wristwatch or google eyeglasses maybe not so much but something focused like the nike fuel band i see a lot of people with fitness oriented devices, if you target it for a very specific audience, you can do well with i it. >> we will see, like so many things at this point about apple. dan ackerman joining us from y th cnet. the strategies at wells fargo advisors joins us this morning. good morning to you. >> hi, carl. >> 1517 here and so many straight weeks of gains, i wonder if you think we're in a precarious position, at least in the short term? >> it seems like the market is a little bit ahead of itself so far this year, to me. saying that, as you and many of your competitors reporting waiting for a pullback and usually means the market will
work its way higher before we see that. >> what is your strategy for the remainder of the quarter and going into the year? >> from last year, our strategy has not changed. we want to take advantage of pullbacks. weed a two nice ones last year, and like to see another one here. we want our clients fully invested in this rally inspectors sensitive to the economy, whether consumer discretionary, like home improvement, retail, general merchandise stores looks really good, materials, diversified chemicals, technology. we want them in those groups. industrials are starting to look better. i think this global recovery will continue and the u.s. recovery will continue. the u.s. economy will probably show positive growth at least through 2014. i think the stock market has more upside over the next couple years and we certainly want our clients to be in it. right now, they're sitting on too much cash. >> how do you balance those
positives you're forecasting with what would probably be a withdrawal of support from the fed as a result, if those things come true? are those not an offset to your bullish thesis. >> if you think the academy will gr -- the economy will grow 2.5%, in my opinion, the fed will be doing what it's doing well into 2014 and wouldn't surprise me longer than that. i don't think the fed will back off any time soon. clearly sometime down the road they are and we'll see what happens then. i see a few things happening, maybe china bouncing back better than we anticipated. i think europe may be flattening out, i thought it would be less bad this year, maybe a little better than that. we have a $108 earnings out there, that may be conservative under those conditions.
who knows, maybe our target is conservative, trying to work on that. the last thing we want to do is mark the market. we feel good about the target, 25 to 15.75. we may trade in the year and investing is definitely a land mine but i think the positives out-weigh it. >> 5100 days since we had -- 5 hundred days since we had a 10% pullback correction. how far away from that do you think we are? >> something north of 10% would be really tough, have to be some totally unforeseen type of event. i think something like debate and a contentious debate over this sequester that's coming up the ends of march 1st. maybe we see 5-8% pull back
based on uncertainty there. i don't think we'll see something north of 10% unless there's a surprise. 5 or 8%, doable. we will see volatility pick up and certainliton pound the table on these pullbacks if we get one for our clients to put that sideline cash to work. >> certainly what a lot of bulls are counting on from your desk and a lot of others around the country. thanks. talk to you soon. >> all right. >> when we come back, why airlines have a lot in common with investment banks and why that's a good thing. first, rick santelli looking at the middle class a little later on. >> absolutely. in 10 minutes, we'll be talking to a doctor from george mason university about that exact topic. one of the cornerstones of politics is the stagnant wages of middle class. that is the cornerstone and a big part of the last election. is it true?
the doctor will have interesting facts on maybe it isn't as apparent as it seems. you have to join us in about 10 minutes. ♪ [ engine turns over ] [ male announcer ] we created the luxury crossover and kept turning the page, writing the next chapter for the rx and lexus. this is the pursuit of perfection. [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim.
tougher comps. but they are sellers today down nearly 4%. >> thanks. gary is comparing investment banks to airlines. i don't think it's because they both give you peanuts. >> we'll get to that in a second. only the old timers know i started my career on wall street 25 years ago as an analyst and nobody thought about investment stocks only as tradiing vehicle. a very famous man from florida got up and said i would never invest in an airline stock while he was cmo because you can't earn investment on your capita what's happened in the last 20 years? capacity came out of the system. again this year 2013 capacity will be down. take a look. gone forever. this bill give you a sense what we lost in terms of some of the
examples of the last 20 years. twa, braniff international, people express. and some people said we never heard of people express. that was the discount airlines. what does that remind you of right now? twf. always wanted to do that on national tv. dean wit jer, shearson lay mon brothers, bear stearns, they have come out of the investing. you saw barclays laying off thousands of people. because of what's happened as a result of and cause an effect what happened in 2008, the investment banks are continuing to shrink, therefore much like the airlines out of necessity because what they had to do to run their business, the same parallels are there today and you are seeing returning on investment capital and equity not going to get back to 2008
massively leveraged roes but you're getting bounce back in roes like airline industry. the lesson is very simple. are you will see higher returns on investment capital when capacity comes out whether you have good management or nemedioe management teams because it will happen as a result of simple p & l and how the simple cash flow statement works, something i thought about, not peanuts, when you look at how these companies are gone forever. >> you and i could start an airline on our own, get a plane out of the desert and like opened a boutique with less difficulty not too long ago. >> great analogy. >> one of the reasons why if you're a bull on the banks right now and think they'll get to market multiples, they very well may and get there in spite of wanting to grow but much like the airlines they learned their lessons and lean and mean for
the time being. >> good stuff. gary back at hq. when we come back, find out why the middle class come back could be spectacularry wrong. back in a minute. look, if you have copd like me, you know it can be hard to breathe, and how that feels. copd includes chronic bronchitis and emphysema. spiriva helps control my copd symptoms by keeping my airways open for 24 hours. plus, it reduces copd flare-ups. spiriva is the only once-daily inhaled copd maintenance treatment that does both. spiriva handihaler tiotropium bromide inhalation powder does not replace fast-acting inhalers for sudden symptoms.
tell your doctor if you have kidney problems, glaucoma, trouble urinating, or an enlarged prostate. these may worsen with spiriva. discuss all medicines you take, even eye drops. stop taking spiriva and seek immediate medical help if your breathing suddenly worsens, your throat or tongue swells, you get hives, vision changes or eye pain, or problems passing urine. other side effects include dry mouth and constipation. nothing can reverse copd. spiriva helps me breathe better. (blowing sound) ask your doctor about spiriva. (announcer) at scottrade, our clto make their money do more.re (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies."
let's get to santelli exchan exchange. rick is talking middle class economics, i think it will be a huge topic tomorrow night. >> i think it will be a huge topic tomorrow night. we all understand the middle class is what made this country great. what i don't understand is how is the middle class doing? not as it appears or the media
told us it is. i would like to talk to this man. is the middle class in this country going to be like dinosaurs, extinct, can't keep up, don't have the purchasinpurchasing e ining power and can't buy. what do you think. >> it's largely burning. the middle class has prospered enormously. those are illusions be lied by underlying reality. i studied this by what middle class consumes and what ordinary wages allow ordinary work others to buy and risen steadily. this whole myth of middle class stagnating is dominating but this is wrong. >> this is destabilizing if a big part of our politics and
debt and how we're going to rectify it, if the middle class info is wrong we won't get a very good return. give me some examples why the middle class may have more buying power and able to participate technologically and medically in ways missed by these statisticians. >> if you look at the proportion of income spent by ordinary american households on household basic, the portion they spend on basics is much lower meaning they have more disposable income to spend on leisure and luxury goods than they did in the 1970s. the average size of american households has fallen steadily since then even if the income of the household this is same, fewer people are tapping into it so each person has more. these are statistics, parts of the statistics these analysts who want to tell the story of middle class stagnation consistently miss. i think you're right, rick. they want to tell the story of
the middle class suffering so washington can ride in like a white knight on a horse to save the middle class. things aren't perfect. there are a lot of problems in the economy but the middle class stagnating is not one of them, to the extent that the progressive left continues to insist that it is. >> it's so funny. i always try to stay on theme on any given day. earlier, doctor, i talked about the great article written by am in the "new york times" and the herd mentality nobody wanted to charge maybe going up in price all the time like our stock market is sending a message that is a little mixed up. after listening to you, guess, how can people in government, that agree with your scenario, the middle class is living longer, they have computers, a lot of technology, access to certain types of medical operations, how can we get this message out that maybe we could
spend our money better? >> i'm the last person to give advice to politicians how to get their message out. i don't have any concrete examples on that. i ask people 40 years old or older to remember what life was like as recently as the 1980s. it wasn't terrible. ordinary people in the 1980s didn't fly on airplanes to go coast-to-coast. ordinary people do that regularly. ordinary people didn't have slabs they could talk to their friends across the country, free of charge. no long distance charge. today, we pull out our cell phones, read our blood pressure, take measurements, get the weather. our middle class american lives are far and away better. why the politicians on the right don't emphasize this even more, i don't understand. certainly the progressive left is winning this debate. one thing they'll do, change the subject start talking about
income inequality. that is a separate issue. income inequality may or may not be rising but the absolute standard of living even poorer americans and certainly middle class americans continues to rise regardless what's happening to the incomes of the people at the top. >> absolutely. doctor, most fascinatinge iningg to you. back to you. straight ahead, more what pope benedict's resignation announcement means nor the catholic church and who might be the next pope. and talk to euro's finance ministers when we're back. and you'll find advanced safety technology like an available heads-up display on the 2013 lexus gs. there's no going back.
30 seconds to the close in europe, a lot greg on politically but for the next few weeks. 92 big spike on the euro. the french are getting nowhere with their attempts to get europe to talk down the single currency. the germany ec on the council. >> the european markets are closing now. >> you'll see there's quite a bit of red around them. there is a bias to sell in european and i'll explain why that is. let me take you back to this spike on the euro. we have moved higher.
peek to people took what was said at the conference last week as opening up concern about the euro. one of the germans in the leadership of the ecb said there's no way they're going to start intervening on the euro and whatever the french are complaining about is a french problem and need to sort out their own competitiveness before they look for bigger policy shifts. be aware we just went into a finance group meeting and saying, let's talk about the euro! and everybody else was saying, not really. bear in mind we have a big split on moves between europe and america at the moment. on wednesday we will get gdp figures and will show a clear contraction for the eurozone in the fourth quarter. as carl mentioned political problems in spain. publishing tax returns and a blackout on the opinion polls
and the smallest member of the euro zone, cypress, they can't agree how to bail out. there's a lot of overhang in the market politically and in terms of policy. the biggest overhang is where we've come from. this is a chart of european markets against the dow from the 27th of july when draggy said he would do everything to save the eurozone and the temptation is to book profits to a greater extent. the risk-reward has shifted. i think as we move forward, you will see a greater temptation to move the markets down there than perhaps the united states. bad news from europe could stall the rally here. in europe, it could attract selling, what i'm trying to say. before i leave these charts, don't be under any illusions, europeans have out-performed the
american markets. if we change this to five year, you will see what a -- take it to full screen so people can see the detail. you will see how bad european markets underperformed america partly because of the destruction of the banking system there and still we have huge questions about banking. earning downgrades will come through to a greater extent as we discussed in europe compared to the united states. >> incredible chart. thanks, simon hobbs. >> mary is at the big board trying to climb out of the red, can't seem to do it. >> we have a fairly broad-based decline but not very deep. up and down volume being barely out-paced by down volume. it suggests maybe we could see a turn. markets taking a pause from the strong move in the last few weeks. we see two pull back, should be the dow transportation not industrials as well as the
russe russell's, were at highs on friday pulling back. and looking at the s&p 500, trading at its best levels in some time. a nice six week run moving to the upside and today is lower led by decline in energy stocks and seeing weaker health care and discretionary, and have seen a pick up in utilities and financials and technology stocks looking well and banking stocks and semiconductors looking positive and given a lift to the two other groups. a couple stocks we're watching one is genworth, looking to sell a couple of its businesses and the stock is moving higher on that news. also novo nordisk, and the fda is asking for more information about its insulin drug and putting pressure on its stock and helping its rival, sanofi
the rival to insulin and buying additional shares of regeneron and it already owns about 17% of that stock and looking to increase its stake. back to you. over at the nymex, sharon. >> carl, that sell-off in the energy market didn't last very long. we are still lower but below the lows of the session and the big reason for changes we're seeing with wti positive and crude futures above $1 in a a barrel. we're watching for weakness in futu futures not where they were but are seeing a little bit of winter storm premium out of the market and we may see a bit of relief at the gas pump as well, this storm causing a slow down in demand and much of the
weekend and this week, still public transportation down and in connecticut, roads closed nearly a day. that will definitely have an impact on demand and perhaps could cause a bit of a stall of prices at the pump higher we have seen 30 cents a gallon. it looks like this summer or spring rally we normally see in prices is starting earlier and could continue to climb from here. back to you. got the surprise announcement from the vatican today as pope benedict the xvi says he will be stepping down by the end of the month. the 85-year-old pope citing health reasons and the first to resign in 600 years and some say it's longer than that. chester gillis is a dean of georgetown college, joins me on the phone. >> good morning. >> good morning, carl. how are you? >> this was a surprise but you
point out in addition to his health, there might have been other obvious burdens he had to deal with that might have contributed to this. >> caller: indeed. for your viewers and the sexual abuse scandal for priests internationally has been a big drag on the church and very difficult to manage and consequences for the universal church, a significant burden most popes have not had to bear. i'm sure that took a toll on the pope. >> interesting you make that comparison to the markets. it is such a unique model as ceo of more than a billion followers you basically have all voting rights and you don't take a salary. if you're looking for a successor, professor, do you look for someone that reflects growth markets, africa or asia or the u.s. or italy maybe getting the papacy back? >> caller: that's an interesting question and probably better
answered by the cardinals. the church has been growing in the developing world and shrinking in the developed world. the italians had a claim on the papacy a long time until john paul the iind now, they had a poll and german in the seat and i imagine they would be interested having it back in italy. at the same time, there is very good talent outside europe that might be able to lead the church. i think they'll look widely but won't be simply geographical, what kind of vision will they have going forward and considerations of age and health obviously in this case. i think all those will be on the table. >> they say you want to live in interesting times. certainly, we all are going to get a chance to watch how the pope's voice is absorbed into this discussion by the conclave, right? how much of a voice will he have in this? >> caller: i suspect he will have very little or none. if he's prudent, i don't think
he will try to appoint his own successor, let the cardinals choose one of their own because they have to live with the decision. this is an unprecedented situation. popes don't generally pick their successors and i don't think he will. my suspicion is he will retreat from the process an not part of the conclave. >> not to say his successor won't know his predecessor is sort of looking over his shoulder. >> that's unprecedented. what do you do with a former pope. in the united states, we're pretty adept at dealing with former presidents and they have a prom innocent role and -- have prominent roles and sometimes they're not. in this case he has to figure out what the role is. >> finally, legacy for the former ratzinger? what will history be judging? >> caller: a couple things. he shepherded the church through a difficult period with sexual
abuse crisis and moral and economic crisis. i think he leaves behind a more conservative church. his disposition was that way. his appoints he's made have been on the conservative side. that will be a legacy as well. >> thank you for your time. amazing story. thank you. >> chester gillis from georgetown. let's turn it over for a market flash. >> kroger at a 52 week high, ants upgraant analysts upgrading the stock from neutral to sell. this is hort term consolidation rather than long term model. analysts note increasing competition from walmart. since adding kroger to the sell list in 2011 the stock is up 11 11%. >> that's amazing long term chart. thanks. when we come back, calling dick tracy, apple experimenting
with this watch-like device with smartphone features and we'll trying to figure out if it is enough to help the stock. ver. ver. i want to know exactly what i am investing in. i want to know exactly how much i'm paying. i want to use the same stuff the big guys use. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. (music throughout) why turbo? trust us. it's just better to be in front. the sonata turbo.
from hyundai. tdd#: 1-800-345-2550 but there is one source with a wealth of etf knowledge tdd#: 1-800-345-2550 all in one place. tdd#: 1-800-345-2550 introducing schwab etf onesource™. tdd#: 1-800-345-2550 it's one source with the most commission-free etfs. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 one source with etfs from leading providers tdd#: 1-800-345-2550 and extensive coverage of major asset classes... tdd#: 1-800-345-2550 all brought to you by one firm tdd#: 1-800-345-2550 with comprehensive education, tools and personal guidance tdd#: 1-800-345-2550 to help you find etfs that may be right for you. tdd#: 1-800-345-2550 schwab etf onesource-- tdd#: 1-800-345-2550 for the most tdd#: 1-800-345-2550 commission-free etfs, tdd#: 1-800-345-2550 you only need one source and one place. tdd#: 1-800-345-2550 start trading commission-free with schwab etf onesource. tdd#: 1-800-345-2550 call, click or visit today. tdd#: 1-800-345-2550 investors should carefully consider tdd#: 1-800-345-2550 information contained in the prospectus, tdd#: 1-800-345-2550 including investment objectives, risks, tdd#: 1-800-345-2550 charges, and expenses. tdd#: 1-800-345-2550 you can request a prospectus by calling schwab tdd#: 1-800-345-2550 at 800-435-4000. tdd#: 1-800-345-2550 please read the prospectus carefully before investing.
to volunteer to help those in need. when a twinge of back pain surprises him. morning starts in high spirits, but there's a growing pain in his lower back. as lines grow longer, his pain continues to linger. but after a long day of helping others, he gets some helpful advice. just two aleve have the strength to keep back pain away all day. today, jason chose aleve. just two pills for all day pain relief. try aleve d for strong, all day long sinus and headache relief. coming up on halftime, what tom barrack says this is
greatest trade. >> nike shares up 20% in three months, does the rebound have legs? carl, we'll see you in 15 minutes. >> going jacketless, i like it, scott. thanks. "wall street journal" reporting apple's testing a vice similar to a wristwatch. man, did you make waves today, jessica. welcome. >> thanks for having me. >> i wonder, does this feel any different than the previous reports of new devices you heard of as you cover this? >> this definitely feels like something apple is working on and sees as an important future product category in the future. i mean, i think they -- apple is conservative. they're not going to come into the market with something a small group of tech geeks want. at the same time, they see this as a hot new area they can't afford to miss out on. >> reading through your piece is like looking for clues, of which there are several. you say they've been doing this for a while in terms of looking
at it. they hired workers. you report the device could work closely with the iphone. i wonder if you have an image in your mind what this thing could look like. the sense i'm getting, this isn't going to be something that tracks your runs, a health monitoring we see a lot. apple really envisions something that can be used as another way to interact with your phone or ipad. something much broader, multipurpose. at this phase, i haven't been able to come up with any of the specifics. we do know they talked to their manufacturing partner at a high level, foxconn about this that suggests it's in the works and on the road map. apple is known for pulling the plug and delaying. it's something that is a serious over there. >> which is what all apple investors have been hungry for,
something revolutionary. you record others have started to enter this, microsoft, nike, google, in terms of wearable computing. which do you think, if any, is having an impact, if not on the market, how we think about these devices. i think google, with the glasses that are sort of out there and look kind of odd but so cool in some ways as well, they're not selling them yet but showing them to developers. i think that set people's imaginations would could be possible in the middle future but seen far away mainstream thing. to have those products out there, google's taken thought leadership on this. >> the story comes in a week tim cook is going to speak at the goldman conference tomorrow. would you expect to hear more clarity on this, if he's pressed about it? >> i wouldn't. tim is not expected to give clarity on products one way or the other.
he has a lot 0 tato talk about einhorn and lobbying around the cash and maybe talking about apple's balance sheet what investors are interested in. >> you are out there on the west coast, how would you characterize this story as to what people believe? >> i hope they believe it. i believe it. am is an innovative company and want to be in these hot areas over time. the timing, fishinging out what phase it's in, there's not a lot of clarity and what the people realize. this isn't a company sitting bac back. >> not to suggest people wouldn't believe your story but there is a difference of something they are materitoying and could be material to earnings, later in the year, that kind of thing. >> good point. i don't think anybody thinks
it's material in the next year or two. there are people looking at the tv set, i think, even more and just what the strategy is around the iphone. those are the big product questions right now. >> moving the ball at all is moving the ball. appreciate your time. jessica joining us from "the journal" out west. what can apple do to a watch to turn its fortunes around. great answers today and we'll get more an squawk street. it is fashion week in new york. the question is, are you on the list? the shopping site and online start-up list, this fashion place being called the google for fashion is transforming the world of online shopping and making money at the same time. what are you doing? work? work. cdw configured these lenovo thinkpad ultrabooks with intel core i7 processors. so, we can work anywhere.
fashion week is under way in new york city. one start-up is givingshipers to add the looks they like to their shopping list. it is a social word for shopping. they provide updates from brands, bloggers and friends they visualize on a news feed or list. the goal is to provide an online experience that makes shopping online easier. lyst makes shopping easier by
getting a commission on each item sale it generates. i have to imagine fashion week is a week long advertisement to get engagement ramped up above where it is. how important is it? >> really important. there are four pig cities lasting about a month. four big cities lasting about a month and they're spreading the spren trends and subcultures to the community. >> you have offices in london and soho. walk me through what you saw the need for the model was? what was the impetus for creating it? what vacuum did you see it feeli filling back then? >> sure. we saw more and more people buying fashion online but similar to the way they do it in the real world. there are tens of thousands of
places to buy fashion online and each gives the consumer the same experience. we were trying to create a smart and personalized way to shop for fashion online and do that by bringing together inventories of hundreds of stores around the world from big boutiques to small brands and personalize it to users based on what they like using a social model. they can follow their favorite brands or bloggers or personalities. that means every feed each user gets is completely unique and more likes because they expressed their interest. >> you kept the walls fairly narrow. you point out if you like to go to the gym or mountain, you won't fine anything on lyst. if you want an h & m skirt, you will find it. how have you fought off the temptation to go broader
fighting off more than you can chew. >> any fashion is an important vertical itself and we're happy to operate within the realms. the community is important us to and we take a lot of effort to make sure we only include items that will resonate within our community. it's not to get as many items of apparel as possible, how do we separate fashion from the wider apparel category. our yardstick is to say if it's something a fashion magazine or blogger would write about it belongs on the lyst and if not, not the right place for news mobile traffic 7-8%. now over 25%. how important is that and how different is the monetization when users are mobile? >> we have seen tremendous growth. i don't think we're the only ones and think we will see that growth continuing the rest of 2013. monetization is an interesting
question. i don't think it's fair to look at the way people behave on one platform or one screen alone. we will see a user start the shopping process on the website at their office maybe and then they might get an e-mail from us saying, hey, this thing you like has just gone on sale and use the hand-set and buy it with a mobile app. we can't say mobile is better at generating sales than the website, each platform feeds each other. >> a good point. a lot of us try to pretend it's one or the other and consumers are more complex than that. >> absolutely. >> chris, thank you for your time. chris morton, the ceo of lyst. keep those reports coming. apple is experimenting with a smart watch. wearable computing is said to be made of curved glass, operate on apple's operating system. what can apple do to a watch to turn its fortunes around? tweet us and we will get some
it's delicious. so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love. [ robert ] we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and make your business dream a reality. at legalzoom.com we put the law on your side. that your mouth is under attack, from food particles and bacteria. try fixodent. it helps create a food seal defense for a clean mouth and kills bacteria for fresh breath. ♪ fixodent, and forget it. [ engine turns over ] [ male announcer ] we created the luxury crossover and kept turning the page, writing the next chapter for the rx and lexus.
this is the pursuit of perfection. writing the next chapter for the rx and lexus. all stations come over to mithis is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers. we